Weekend Stock Market Outlook

Stock Market Outlook For The Week of
February 23rd = Uptrend


ADX Directional Indicators: Downtrend
Price & Volume Action: Mixed
Objective Elliott Wave Analysis: Uptrend


The stock market outlook starts this week in an uptrend. The ADX directional indicators turned bearish on Friday, but price/volume remains mixed and OEW charts still show an uptrend.

Technical analysis of daily SPX prices

2020-02-23 - SPX Trendline Analysis - Daily

The S&P notched another all time high last week, but also ran into institutional selling. On the positive side, even though the total number of distribution days is high, they're clustered in January. The selling we saw last week was relatively low, given then overall trading volume last week was well below average.

On the negative side, the S&P is still over-extended from its 200-day, compared to historical averages, so a sell-off wouldn't surprise.

Keep in mind that prices tend to take the stairs up, but take the elevator down! So watch out for high volume selling this week, especially if the 50-day moving average doesn't hold.

Technical analysis of weekly SPX prices

2020-02-23 - SPX Trendline Analysis - Weekly

Within China, there are some encouraging signs that the spread of the coronavirus has slowed. However, the virus hasn't been contained and is now spreading faster outside of China (e.g. South Korea, Italy, etc.).

To date, the indexes have held up relatively well. But there will be economic impacts even if things improve from here on out, so investors need to stay vigilant (especially those of you who are passive investors).

The S&P500 is a market cap index, so the companies with the largest market cap have the greatest influence. Right now, the 5 largest companies in the index are Microsoft, Apple, Amazon, Google and Facebook. They account for ~18% of the index.

And Apple just lowered revenue expectations because of the situation. They're the first company to make major headlines doing so, but far from the only company that will see their revenues take a hit. Watch for additional warnings as the quarter progresses; anything from those top 5 will have an oversize impact on the S&P.

It's concerning that there's so little discussion of the coronavirus in the U.S.. Instead, it has been politics 24/7. With earnings season coming to a close, and a lack of data to be released, I expect that will change this week...especially if we see any type of sell-off or correction (no matter how "needed" it may be).

Best to your week!

If you find this research helpful, please tell a friend. If you don't find it helpful, tell an enemy. I share articles and other news of interest via Twitter; you can follow me @investsafely. The weekly market outlook is also posted on Facebook and Linkedin.

Charts provided courtesy of stockcharts.com.

If you're interested in learning more about the relationship between price and volume, or how to find and trade the best stocks for your growth strategy, check out this book on Amazon via the following affiliate link: How to Make Money in Stocks: A Winning System in Good Times and Bad. It's one of my favorites.

For the detailed Elliott Wave Analysis, go to the ELLIOTT WAVE lives on by Tony Caldaro.

Once a year, I review the market outlook signals as if they were a mechanical trading system, while pointing out issues and making adjustments. The goal is to give you to give you an example of how to analyze and continuously improve your own systems.

This material is for general communication and is provided for informational and/or educational purposes only. None of the content should be viewed as a suggestion that you take or refrain from taking any action nor as a recommendation for any specific investment product, strategy, or other such purpose. Certain information contained herein has been obtained from third-party sources believed to be reliable, but we cannot guarantee its accuracy or completeness.
To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisors of his/her choosing. Invest Safely, LLC is not a law firm, certified public accounting firm, or registered investment advisor and no portion of its content should be construed as legal, accounting, or investment advice.
The material is not to be construed as an offer or a recommendation to buy or sell a security nor is it to be construed as investment advice. Additionally, the material accessible through this website does not constitute a representation that the investments described herein are suitable or appropriate for any person.
Hypothetical Presentations:
Any referenced performance is “as calculated” using the referenced funds and has not been independently verified. This presentation does not discuss, directly or indirectly, the amount of the profits or losses, realized or unrealized, by any reader or contributor, from any specific funds or securities.
The author and/or any reader may have experienced materially different performance based upon various factors during the corresponding time periods. To the extent that any portion of the content reflects hypothetical results that were achieved by means of the retroactive application of a back-tested model, such results have inherent limitations, including:
Model results do not reflect the results of actual trading using assets, but were achieved by means of the retroactive application of the referenced models, certain aspects of which may have been designed with the benefit of hindsight
Back-tested performance may not reflect the impact that any material market or economic factors might have had on the use of a trading model if the model had been used during the period to actually manage assets
Actual investment results during the corresponding time periods may have been materially different from those portrayed in the model
Past performance may not be indicative of future results. Therefore, no one should assume that future performance will be profitable, or equal to any corresponding historical index.
The S&P 500 Composite Total Return Index (the "S&P") is a market capitalization-weighted index of 500 widely held stocks often used as a proxy for the stock market. Standard & Poor's chooses the member companies for the S&P based on market size, liquidity, and industry group representation. Included are the common stocks of industrial, financial, utility, and transportation companies. The S&P is not an index into which an investor can directly invest. The historical S&P performance results (and those of all other indices) are provided exclusively for comparison purposes only, so as to provide general comparative information to assist an individual in determining whether the performance of a specific portfolio or model meets, or continues to meet investment objective(s). The model and indices performance results do not reflect the impact of taxes.

Investing involves risk (even the “safe” kind)! Past performance does not guarantee or indicate future results. Different types of investments involve varying degrees of underlying risk. Therefore, do not assume that future performance of any specific investment or investment strategy be suitable for your portfolio or individual situation, will be profitable, equal any historical performance level(s), or prove successful (including the investments and/or investment strategies describe on this site).